Market Musings 3/3/2024

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

The S&P 500 rose another 3% in March adding a 5th straight green month to the market rally. Entering April, we’re seeing a lot more hesitation with expectations sky high.

🏀 March Madness

Markets started March fairly tentative after the #AI euphoria rally in February opening with two slightly red weeks. Investors fretted over February’s inflation data with both the core CPI and PPI coming in hotter-than-expected. It marked the second month of inflation reaccelerating and likely stickier than hoped.

However, investor worries were washed away after the Fed meeting. Despite the negative inflation data, Fed officials maintained their dot plot forecast for three #RateCuts in 2024 and Powell reassured the market with dovish remarks seeming to shrug off the recent data as in-line with its expectations. Markets rallied in the second half of the month on #RateCuts anticipation.

🌦️ April Showers?

Just three days into April, markets have pulled back off the March highs. In-line PCE inflation data released after the month end had a mixed reaction from investors. Economic analysts were relieved there was no upside surprise, but are still concerned with the stickier inflation.

Looking forward, we see markets anxiously waiting for March inflation data to hopefully see a reverse in the reaccelerating inflation trend followed by high expectations for the upcoming earnings season. Buckle up, April should be a big month.

After 5 straight green months, we aren’t surprised that markets are trading more cautiously. While more muted inflation data and strong earnings could continue the rally, we believe it’s more likely markets take a healthy breather in April and heading into the summer.

We expect some near-term volatility as markets are likely to consolidate heading into a very mild recession later this year (not the perfect soft landing). However, longer-term, we still believe we’re already well into the next bull market.

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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.

Original Photo by Edgar Colomba.